Russia’s domestic chocolate market set to grow significantly

KPMG is forecasting rapid growth for the Russian chocolate market – 45 percent over the next three years. By contrast, growth in the world market for chocolate will only rise 2 percent annually. Experts see Russians moving up the value chain and increasingly purchase handmade chocolates, while manufacturers themselves do not expect such explosive growth.

Psychological research indicates that chocolate consumers consider the confection to be an unhealthy, yet extremely tasty treat – it is most frequently an impulse buy. Source: PhotoXPress.

The global
chocolate market shows stable development and is estimated to grow at an
average of 2 percent annually over the next five years, according to a KPMG
study entitled “The chocolate of tomorrow: What today's market can tell us
about the future.”

The study shows
that Russia is one of the most promising emerging markets for chocolatiers. Its
market is worth more than $8 billion and is expected to grow 45 percent by
2016. “The degree to which consumers are moving up to products with higher
price tags is motivating producers to increase their output of handmade
chocolates,” said Georgy Pataraya, Head of Consumer Markets at KPMG Russia and
CIS.

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By comparison,
U.S. consumers display an unwavering demand for high-quality products at
affordable prices, as well as wild flavors such as bacon or wasabi. The overall
drive toward healthy eating has yet to become a factor for chocolate
consumption in the United States. Meanwhile, in Western Europe – which is still
the largest chocolate market in the world – chocolatiers are increasingly
concerned with the health of their consumers. In 2011, 10 percent of the new
chocolate products launched in Western Europe were marketed as vegetarian, 7
percent as free from additives and 7 percent as satisfying organic food regulations.

Psychological
research indicates that chocolate consumers consider the confection to be an
unhealthy, yet extremely tasty treat – it is most frequently an impulse buy.

Chocolate
consumption is expected to increase over the next one to two years and be
driven by rising disposable incomes and expanding consumer lending, said Andrei
Korkunov, the founder of the Odintsovskaya Confectionery. “I believe in the
Russian market. Russians are being spooked with a crisis all the time, but life
goes on – we still go to visit friends and bring gifts for our hosts. People
want to live today and not worry about tomorrow. It’s an attitude that
encourages spending cash on high-quality items, and I’d class high-quality
chocolate in that category,” Korkunov said. At the same time, Korkunov only
expects growth rates of between 5 to 7 percent annually for the chocolate
market.

The consumption
of handmade chocolates will grow, although at a slower pace than other types of
chocolate whose demand is not based on a certain consumer culture. “Even the
tiniest town in France, Belgium, or Italy will have a chocolatier,” said
Korkunov. “In Russia, such shops have only been opening in large cities; but
they will spread to smaller towns too, because Russians love their chocolate.
Then again, this won’t happen within two or three years. It is going to take
longer than that.”

The full version of the article was published in Russian in RBC Daily.